Targeted Home Buying : 273 Cities For Real Estate Investors
It's not just the housing market that's heating up nationwide -- the broader U.S. economy is, too.
According to the National Association of Homebuilders (NAHB), 273 U.S. metropolitan areas are showing "measurable and sustained growth" this April, up from fewer than one hundred last fall, and more than nine times the count of just 18 months ago.
For real estate investors in search of opportunity, the Improving Market Index highlights cities in which investments may be well-timed.
273 "Improving" U.S. Markets
The Improving Market Index (IMI) is a monthly publication meant to be more than just a housing market indicator, a la the Case-Shiller Index or the New Home Sales report.
As published by the NAHB, the Improving Market Index is meant to identify U.S. metropolitan areas in which economic growth is occurring broadly -- not just in housing.
To find such "growth cities", the homebuilder trade group collates local economic data across three separate data series, each sourced from a different government division, and applies to them a formula.
First, the NAHB wants to see month-over-month growth in each of the three data series. Improving readings suggest that the given local economy is expanding.
Next, the NAHB confirms that at least six months have passed since each of its three tracked series have "bottomed". In watching for new troughs, the index allows for zig-zag growth, but only with a positive trend.
Metropolitan areas which meet both economic standards are then deemed "improving", and the city is added to the NAHB Improving Market Index tally.
The data sets employed by the IMI are :
- Local employment statistics, as provided by the Bureau of Labor Statistics
- Local changes in home prices, as provided by Freddie Mac
- Local single-family housing starts, as provided by the U.S. Census Bureau\
The methodology of the Improving Market Index permits it to look past "green shoot" recoveries and false starts; focusing instead on longer-term, more sustainable growth within its tracked U.S. markets. It's these markets in which real estate investors may find their strongest long-term returns.
All 50 States Represented : Good Buys Everywhere
The April 2013 Improving Market Index included metropolitan areas within all 50 states for the second consecutive month. The District of Columbia is included, too. Overall, 75 percent of the IMI's tracked markets made the list.
5 cities were newly added to the Improving Market Index for April :
- Macon, Georgia
- Portland, Maine
- Rocky Mount, North Carolina
- Eugene, Oregon
- Jackson, Tennessee
It's also noteworthy that the IMI already includes such cities as Cincinnati, Ohio; Las Vegas and Reno, Nevada; and added to the Improving Market Index in November is Modesto, California. One year ago, Modesto was among the nation's leaders in foreclosure activity. Today, its home prices are rising, its housing starts are improving, and its employment rate is rising.
For the 273 named cities, the average employment growth is +45.3% since each town's respective employment troughs. Average home price growth is +6.4% from the same.
6 metro areas dropped from last month's IMI list. They were Napa, California; Tallahassee, Florida; Bangor, Maine; Brownsville, Texas; Roanoke, Virginia; and Yakima, Washington.
The IMI : A Target For Real Estate Investors
For today's real estate investors, there's more to buying a home than just finding a "cheap property". Area growth and local economies matter, too -- especially when you're dependent on renters with good jobs to fill bedrooms.
Some investors pay cash. For everyone, there are two loan programs worth considering. The first is the 5-10 Properties Program which exists for investors with more than 4 properties financed. The second is the Delayed Cash-Out Refinance which is for homeowners who pay cash for a home, but want to extract that equity as cash at a later date.
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